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GLOBAL DIPLOMACY COURSE 66

George Shultz Essay

Intro

George Shultz, in full George Pratt Shultz, (born December 13, 1920, New York, New York, U.S.
—died February 6, 2021, Stanford, California), American government official, economist, and
business executive who, as a member of the presidential cabinets of Richard Nixon and Ronald
Reagan, significantly shaped U.S. economic and foreign policy in the late 20th century.

After graduating from Princeton University in 1942 with a bachelor’s degree in economics, he
enlisted in the U.S. Marine Corps and served in the Pacific theatre during World War II,
eventually attaining the rank of captain. At the end of the war, Shultz enrolled at the
Massachusetts Institute of Technology, where he earned a doctoral degree in industrial
economics in 1949 and stayed on as a faculty member. In 1957 he accepted a position as
professor of industrial relations at the University of Chicago and five years later rose to
become dean of its Graduate School of Business. While employed in academia, Shultz often
arbitrated disputes between corporate management and labour organizations and won
respect for his evenhandedness. He also became involved in public service, with key roles on
economic task forces and advisory committees under three presidential administrations in the
1950s and ’60s.

After Nixon was elected president in 1968, Shultz, a fellow Republican, was appointed U.S.
secretary of labour. Despite a rise in labour conflicts during his tenure, as well as controversy
over a plan he oversaw that introduced racial hiring quotas in federal construction projects,
Shultz maintained congenial relationships with both business and union leaders. In June 1970
he was named director of the newly created Office of Management and Budget, and in 1972
he was appointed secretary of the U.S. Department of the Treasury. In those positions, he
helped formulate the Nixon administration’s economic policies, including attempts to control
rampant inflation through wage and price freezes. He also negotiated a set of trade
agreements with the Soviet Union in 1973 before resigning from office a year later to pursue
interests outside Washington. For most of the next eight years, Shultz served as president of
the Bechtel Corp., a global engineering firm headquartered in San Francisco, while teaching
part-time at Stanford University.

Influence on American Diplomacy

As Secretary of State, Shultz played a crucial role in guiding U.S. diplomacy during his lengthy
six-and-a-half-year tenure in office. Upon his confirmation, he inherited a number of foreign
policy challenges, including war in Lebanon, delicate negotiations with the People’s Republic of
China and the Government on Taiwan, and a ratcheting up of Cold War tensions with the
Soviet Union.

Over the next several years, Shultz focused U.S. diplomatic efforts on resolving the conflict in
the Middle East, defusing trade disputes with Japan, managing increasingly tense relationships
with several Latin American nations, and crafting U.S. responses to the rise of Mikhail
Gorbachev and the new Soviet policies of perestroika and opening to the West.
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In part due to his collegial relationships with President Reagan and other members of the
Administration, Shultz was able to exert considerable influence over U.S. foreign policy in
regards to these issues. Although he was unable to forge a lasting resolution to the Middle East
conflict, he negotiated an agreement between Israel and Lebanon and convinced Israel to
begin withdrawing its troops in January 1985, in spite of Lebanon’s contravention of the
settlement.

He completed the discussions between the United States and China, begun under Secretary of
State Alexander Haig, which led to the joint communiqué of August 1982 that has provided
stability for U.S.-Chinese relations ever since.
Shultz had not been able to halt the arms-for-hostages deals with Iran that provided funds for
the Contras in Nicaragua, which he had opposed, but by 1988 he had helped to broker
agreements that eased the disputes of Nicaragua’s civil war.

He had other successes in Latin America, but his crowning achievements came in regards to
U.S.-Soviet relations. Through positive responses to the overtures of Gorbachev and his
Foreign Minister, Eduard Shevardnadze, and through his own initiatives, Shultz helped to draft
and sign landmark arms control treaties and other agreements that helped to diminish U.S.-
Soviet antagonism.

As a result, under Shultz’s leadership, U.S. diplomacy helped to pave the way for the ending of
the Cold War during 1989.

Secretary of Labor

Shultz was President Richard Nixon's Secretary of Labor from 1969 to 1970. He soon faced the
crisis of the Longshoremen's Union strike. The Lyndon B. Johnson Administration had delayed
the walkout with a Taft Hartley injunction that expired, and the press pressed him to describe
his approach. He applied the theory he had developed in academia: he let the parties work it
out, which they did quickly. He also imposed the Philadelphia Plan, which required
Pennsylvania construction unions to admit a certain number of black members by an enforced
deadline - a break with their past policy of largely discriminating against such members. This
marked the first use of racial quotas in the federal government.

Secretary of the Treasury

Shultz was United States Secretary of the Treasury from June 1972 to May 1974. During his
tenure, he was concerned with two major issues, namely the continuing domestic
administration of Nixon's "New Economic Policy," begun under Secretary John Connally (Shultz
privately opposed its three elements), and a renewed dollar crisis that broke out in February
1973.

Domestically Shultz enacted the next phase of the NEP, lifting price controls begun in 1971.
This phase was a failure, resulting in high inflation, and price freezes were reestablished five
months later.
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Meanwhile, Shultz's attention was increasingly diverted from the domestic economy to the
international arena. In 1973, he participated in an international monetary conference in Paris
that grew out of the 1971 decision to abolish the gold standard, a decision Shultz and Paul
Volcker had supported. The conference formally abolished the Bretton Woods system, causing
all currencies to float. During this period Shultz co-founded the "Library Group," which became
the G7. Shultz resigned shortly before Nixon to return to private life.

Secretary of State

On July 16, 1982, Shultz was appointed by President Ronald Reagan as the 60th U.S. Secretary
of State, replacing Alexander Haig, who had resigned. Shultz served for six and a half years, the
longest tenure since Dean Rusk's. The possibility of a conflict of interest in his position as
secretary of state after being in the upper management of the Bechtel Group was raised by
several senators during his confirmation hearings. Shultz briefly lost his temper in response to
some questions on the subject but was nevertheless unanimously confirmed by the Senate.

Relations with China

Shultz inherited negotiations with the People's Republic of China over Taiwan from his
predecessor. Under the terms of the Taiwan Relations Act, the United States was obligated to
assist in Taiwan's defense, which included the sale of arms. The Administration debate on
Taiwan, especially over the sale of military aircraft, resulted in a crisis in relations with China,
which was alleviated only in August 1982, when, after months of arduous negotiations, the
United States and the PRC issued a joint communiqué on Taiwan in which the United States
agreed to limit arms sales to the island nation and China agreed to seek a "peaceful solution."

Relations with Europe and the Soviet Union

By the summer of 1982, relations were strained not only between Washington and Moscow
but also between Washington and key capitals in Western Europe. In response to the
imposition of martial law in Poland the previous December, the Reagan administration had
imposed sanctions on a pipeline between West Germany and the Soviet Union. European
leaders vigorously protested sanctions that damaged their interests but not U.S. interests in
grain sales to the Soviet Union. Shultz resolved this "poisonous problem" in December 1982,
when the United States agreed to abandon sanctions against the pipeline and the Europeans
agreed to adopt stricter controls on strategic trade with the Soviets.

A more controversial issue was the NATO Ministers' 1979 "dual track" decision: if the Soviets
refused to remove their SS-20 medium range ballistic missiles within four years, then the Allies
would deploy a countervailing force of cruise and Pershing II missiles in Western Europe. When
negotiations on these intermediate nuclear forces (INF) stalled, 1983 became a year of protest.
Shultz and other Western leaders worked hard to maintain allied unity amidst anti-nuclear
demonstrations in Europe and the United States. In spite of Western protests and Soviet
propaganda, the allies began deployment of the missiles as scheduled in November 1983.

When President Mikhail Gorbachev of Russia came to power in 1985, Shultz advocated that
Reagan pursue a personal dialogue with him. Reagan gradually changed his perception of
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Gorbachev's strategic intentions in 1987, when the two leaders signed the Intermediate Range
Nuclear Forces Treaty. The treaty, which eliminated an entire class of missiles in Europe, was a
milestone in the history of the Cold War. Although Gorbachev took the initiative, Reagan was
well prepared by the State Department to negotiate.

Two more events in 1988 persuaded Shultz that Soviet intentions were changing. First, the
Soviet Union's initial withdrawal from Afghanistan indicated that the Brezhnev Doctrine was
dead. "If the Soviets left Afghanistan, the Brezhnev Doctrine would be breached, and the
principle of 'never letting go' would be violated", Shultz reasoned.[36] The second event,
according to Keren Yarhi-Milo of Princeton University, happened during the 19th Communist
Party Conference, "at which Gorbachev proposed major domestic reforms such as the
establishment of competitive elections with secret ballots; term limits for elected officials;
separation of powers with an independent judiciary; and provisions for freedom of speech,
assembly, conscience, and the press. “The proposals indicated that Gorbachev was making
revolutionary and irreversible changes.
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Bibliography

"George Shultz - Wikipedia". En.Wikipedia.Org, 2021,

https://en.wikipedia.org/wiki/George_Shultz#Secretary_of_Labor.

Shultz, George P. Turmoil and Triumph My Years As Secretary of State (1993)

Shultz, George P. and James Timbie. A Hinge of History: Governance in an Emerging New
World (2020)

"George Pratt Shultz - People - Department History - Office Of The

Historian". History.State.Gov, 2021,
https://history.state.gov/departmenthistory/people/shultz-george-pratt. Accessed 3 Aug
2021.

Cunningham, John M.. "George Shultz". Encyclopedia Britannica, 7 Feb. 2021,

https://www.britannica.com/biography/George-Shultz. Accessed 3 August 2021.